'Remarkable Measures' Merkel Praises Italian Prime Minister at Berlin Meeting

German Chancellor Angela Merkel praised Italy's willingness to make speedy reforms on Wednesday in a demonstration of unity with the country's new leader. And Italian Prime Minister Mario Monti applauded German budgetary discipline. Concerns that Berlin is playing too dominant a role in managing the euro crisis, it seems, remained a minor issue.

"Extraordinarily important and remarkable measires": Merkel and Monti showed unity in Berlin.

"Extraordinarily important and remarkable measires": Merkel and Monti showed unity in Berlin.

German Chancellor Angela Merkel (CDU) on Wednesday praised Italy's prime minister and his efforts to impose budgetary reforms and austerity measures. Merkel, who met with Mario Monti during his first trip to Germany as Italy's new prime minister in Berlin on Wednesday, said he and his government have, within a few days, "taken extraordinarily important and remarkable measures."

The chancellor praised the Italians for the speed with which they have undertaken budget consolidation and structural reforms. "This will strengthen Italy," she said. The chancellor said she has the greatest respect for the speed with which the reforms are being implemented. "I believe the work of the Italian government will also be honored," she said.

The talks between Merkel and Monti lasted longer than expected, and a joint press conference started about 45 minutes later than planned. Merkel said it was not due to disagreements between the two leaders, but to the sheer abundance of issues that were discussed.

Before the meeting, Monti had demanded greater recognition for Italy and warned against German and French dominance in the management of the euro debt crisis. He told the conservative German daily Die Welt: "If, in the foreseeable future, there are not tangible results for the Italians from their willingness to save and reform, there will be protests in Italy against Europe and against Germany."

'Europe No Longer Has To Fear Italy'

But Monti also delivered some praise himself in Berlin. Germany is "exemplary" in its budget discipline, he said. The Italians, for their part, have accepted the new austerity measures with a high level of "maturity." Monti also told Merkel Wednesday: "Europe no longer has to fear Italy as a possible source of contagion for the euro zone, but can count on Italy to play its proper role beside Germany and France and other countries in the drive for stability and growth."

Monti, a former member of the European Commission, took office as Italy's leader in November, after his predecessor Silvio Berlusconi stepped down under pressure over his poor handling of the euro crisis that destroyed his credibility on the markets, abroad and at home. Italy's national deficit stands at around €1.9 trillion or around 120 percent of the country's gross domestic product (GDP).

During the Berlin meeting, the also leaders discussed the "fiscal compact" being planned for the 17 euro-zone countries and nine other European Union member states, which could be passed at a summit in Brussels later this month. Merkel, Monti and French President Nicolas Sarkozy are expected to meet on Jan. 20 ahead of that summit to coordinate their approach.

The fiscal compact includes plans for balanced budget initiatives, or "debt brakes" as they are called here, and tougher rules for countries that violate deficit rules. According to the agreement for greater budgetary discipline, countries in which the national deficit exceeds 60 percent of the economic output must reduce this ratio by one-twentieth each year. Italy would therefore be forced to save enormous sums of money each year, which could in turn stall growth.

kla and mbw -- with wires


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